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Vehicle rental companies expect surge in demand post-Covid

Annapurani V Chennai | Updated on May 26, 2020 Published on May 26, 2020

The demand for intra-city daily travel in the self-drive business expected to go up by 35-40 per cent for the next six to eight months   -  The Hindu

As workplaces reopen amid steps to contain the spread of Covid-19, the necessity for mobility as a service remains as relevant as ever. With people wanting to avoid public or shared transport to keep themselves safe from contracting the virus, and the notion of owning a personal vehicle taking a backseat what with the current recession, furloughs and pay-cuts, the need to rent a vehicle will definitely go up, said heads of self-drive vehicle rental firms.

“We expect to see a significant spike in demand for personal mobility post the lockdown and are preparing for a 4X to 5X hike in demand in the coming months,” said Greg Moran, co-founder and CEO, Zoomcar. He added that they are expecting a surge in demand for car subscriptions, and for in-city trips compared to outstation ones. “We expect 90 per cent to be in-city and 10 per cent outstation during the post-Covid-19 times,” Moran said.

Pulkit Ahuja, National Head, MyChoize Car Rentals, said that they expect the demand for intra-city daily travel in the self-drive business to go up by 35-40 per cent for the next six to eight months.

“While the leisure travel segment has come to a standstill, there is a significant demand for weekly and monthly leasing. Given the extremely low per capita ownership of motor vehicles in India, we expect this demand to rise further as the government eases lockdown restrictions across the country,” said Ashwarya Singh, co-founder and CEO of Drivezy. “We already have a significant foothold in two-wheeler leasing and have now launched monthly leasing services for cars as well,” he added.

Tweaking business models

Singh added that they are now working to launch a business-to-business (B2B) leasing vertical for the long-term leasing of two-wheelers and cars. Drivezy has predominantly been a business-to-consumer (B2C) service.

The self-drive vehicle rental industry is now looking at adding new subscription models or tweaking existing ones, and reducing subscription prices to cater to various customers based on their needs.

Zoomcar’s Moran noted that car subscriptions will continue to evolve, with more flexible leasing plans for longer durations of 12, 24, and 36 months.

Vehicle rental companies purchase or lease vehicles and rent them to customers by the hour, day, week or month, with or without fuel, according to their preference, for a fee. The price varies from company to company, depending on the city and location.

Meeting customer expectations

“As people move away from cabs and public transport due to concerns of contracting the disease, the demand for long-term subscriptions will rise, especially in the two-wheeler segment, as people begin commuting to their places of work. Prior to the outbreak, our vehicles were 50-60 per cent more economical than cabs. We have slashed our tariffs by another 30 per cent and have done away with surge pricing on weekends to incentivise adoption among people who commuted through public transport prior to the lockdown,” said Drivezy’s Singh. “We are also in talks with multiple stakeholders to bring electric scooter leasing to major Indian cities once the outbreak subsides,” he added.

To meet customers’ expectations of a dedicated car for long-term use, MyChoize is planning to launch a subscription product post the lockdown, through which they will be able to select a car based on its age, model and mileage, for flexible tenures and monthly rentals, Ahuja said.

“This would enable customers to have a sanitised personal car at their disposal, at all times, without having to purchase one, in case they want to avoid using public transport,” he added.

Mobility solutions that support physical distancing will be people’s first choice until there is a definitive cure or vaccine against Covid-19. Companies that are able to tweak their current models to suit this requirement of commuters will eventually see a surge in demand, said Drivezy’s Singh. “There could also be a silver lining for the pre-owned automobile industry once the lockdown restrictions ease further.”

Published on May 26, 2020
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